Gold Reclaims $5,000 as Middle East Tensions Fuel Safe Haven Demand

LONDON (February 4) Gold (XAU/USD) has bounced back above $5,000, with dip buyers rushing in after last week’s steep $1,000 drop. Silver edged higher too, trading just above $90, signalling that selling pressures may have eased for now.

A fresh surge in safe-haven demand comes amid renewed geopolitical tension between the US and Iran. Overnight, the US shot down an Iranian drone in the Arabian Sea, while Iranian gunboats were spotted near a US-linked tanker in the Strait of Hormuz.

These incidents have overshadowed earlier market optimism over planned US-Iran talks this Friday, reminding investors that risks remain high.

Gold’s recent losses had been driven by bets that US President Donald Trump’s Fed nominee, Kevin Warsh, could be less dovish than hoped. A firmer dollar pressured metals, while profit-taking added to the slide after gold hit nearly $5,600 per ounce last week.

Yet the fundamentals underpinning gold remain solid, with physical buying, central bank purchases, and ongoing haven demand have kept the metal up nearly 15% in 2026, despite the recent dip. Silver’s recovery to $90 per ounce suggests that over-leveraged positions have been flushed from the market.

Analysts continue to eye elevated targets for both metals. Forecasts for gold range from $5,600 to $6,000 by year-end, while silver is seen between $100 and $140. Recent gains have outpaced expectations, suggesting bullish momentum remains intact even if predictions lag behind market moves.

FXStreet